Overnight gains on global stock indices and the belief that credit markets are starting to loosen up underlined a strong day for risky assets this morning, sterling included, although risk aversion levels still remain high.

Sterling actually fell against the USD for the most part of yesterday as bearish housing figures and consumer confidence numbers weighed. Consumer confidence in January was the lowest it has ever been, yet more disappointment for President Obama. Housing figures also showed that property prices in the 20 largest metropolitan areas fell by 2.2% and 18% on an annual basis. This would tie in with our assertions on the video update that price falls have allowed an increase in existing home sales. The FTSE was down 0.4% as an average.

Asian markets have been trending higher; maybe a welcome hangover from Lunar New Year celebrations. Inflation figures in Australia were a lot lower than expected as well which will allow banks to slash interest rates and get credit markets flowing again.

Euro strengthened against sterling yesterday as a strong IFO number showed that the business climate in Germany has improved over the past month. This is by no means a recovery however and we would need to see at least 3 good surveys before judging it so.

Data today will focus around the Fed decision at 19.15. German consumer confidence was steady from last month as lower energy prices allowed households to buoy the High St.

All this and more is available on the video blog: http://uk.youtube.com/user/WorldFirstJC

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